Labor’s big plan is to rent forever

Labor wants to lock in perpetual renting to benefit institutional investors and foreign fund managers at the expense of younger Australians.

The perpetual renting plan has two components – new tax breaks for institutions and increasing Commonwealth payments.

First, Treasurer Jim Chalmers announced that Labor would introduce "new tax breaks for investment in build-to-rent housing". Labor will halve the managed investment trust withholding tax rate for build-to-rent developments from 30 to 15 per cent at a cost $30m by the 2026-27 financial year.

The build-to-rent tax concessions are designed for super funds and foreign fund managers so they can build properties which can only be used as rentals.

This agenda neatly suits the principal donors to the Labor Party – the industry super funds – which have paid $40m in super money to unions/ALP in the past 12 months.

Second, Labor is further underwriting the corporate housing policy by ratcheting up Commonwealth rent assistance.

The Commonwealth will spend a total of $31.8bn on rent assistance over five years from 2023-24.

Of course we want to support renters in a cost-of-living crisis and we won't get in the way of this support. But it is expensive.

Accordingly, I asked the Parliamentary Budget Office to model the impact on the budget if a group of 38-year-olds rented into retirement, instead of being able to access their super to purchase a home.

If this group went into their own house, the PBO found the Commonwealth would save over $35m over the forward estimates and over $86m in the medium term in rent assistance expenditure.

But Labor isn't looking at the super options. Instead, Labor is calibrating tax and budget settings which formalise the government waving the white flag on home ownership.

Labor's virtue circle is that the super funds receive tax concessions for build-to-rent and become Australia's landlords.

Labor seems to believe that big super should be able to use the savings of Australians to build and own homes, while individuals and families are not entitled to their own money to purchase their own home.

Andrew Bragg is a NSW Liberal Senator

Originally published in the Courier Mail